Chapter Ethics and Social Responsibility MGMT Chuck Williams Designed & Prepared by B-books, Ltd Ethical and Unethical Workplace Behavior Ethics The set of moral principles or values that defines right and wrong for a person or group What Is Ethical and Unethical Workplace Behavior? After reading these sections, you should be able to: identity common kinds of workplace deviance describe the U.S Sentencing Commission Guidelines for Organizations and explain how they both encourage ethical behavior and punish unethical behavior by businesses Common Kinds of Workplace Deviance 1.1 U.S Sentencing Commission Guidelines Companies can be prosecuted and punished even if management didn’t know about the unethical behavior Who, What, and Why? • Nearly all businesses are covered • Punishes a number of offenses • Encourages businesses to be proactive 2.1 Partial List of Offenses Invasion of privacy Price fixing Fraud Customs violations Antitrust violations Civil rights violations Theft Money laundering Conflicts of interest Embezzlement Dealing in stolen goods Copyright infringements Extortion …and more 2.1 Compliance Program Steps Steps Steps in in determining determining fine fine size: size: 1 Determine Determine the the base base fine fine 2 Compute Compute aa culpability culpability score score 3 Multiply Multiply the the base base fine fine by by the the culpability culpability score score Proactive companies get smaller fines! 2.2 Compliance Program Steps Establish standards and procedures Assign upper-level managers to be in charge Delegate decision-making authority only to ethical employees Encourage employees to report violations Train employees on standards and procedures Enforce standards consistently and fairly 2.2 Improve program after violations How Do You Make Ethical Decisions? After reading the next two sections, you should be able to: describe what influences ethical decision making explain what practical steps managers can take to improve ethical decision making 10 Practical Steps to Ethical Decision Making Select Select and and hire hire ethical ethical employees employees Establish Establish aa Code Code of of Ethics Ethics Train Train employees employees to to make make ethical ethical decisions decisions Create Create an an ethical ethical climate climate 23 Practical Steps to Ethical Decision Making Select Select and and hire hire ethical ethical employees employees If you found a wallet containing $50, would you return it with the money? • • Overt Integrity Tests Personality-Based Integrity Tests 4.1 24 Practical Steps to Ethical Decision Making Establish Establish aa Code Code of of Ethics Ethics • Communicate code of ethics both inside and outside the company • Develop ethical standards and procedures specific to business 4.2 Web Link http://www.nortelnetworks.com 25 Ethics Training Ethics Ethics Training Training • Develops employee awareness of ethics • Achieves credibility with employees • Teaches a practical model of ethical decision making 4.3 Web Link http://ethics.bellsouth.com 26 Ethics Training Lockheed Boeing Bell South U.S Dept of Justice 3M City of Philadelphia …and more require employees to take ethics training 27 A Basic Model of Ethical Decision Making 1 Identify Identify the the problem problem 2 Identify Identify the the constituents constituents 3 Diagnose Diagnose the the situation situation 4 Analyze Analyze your your options options 5 Make Make your your choice choice 6 Act Act 4.3 28 Ethical Climate Establishing Establishing an an Ethical Ethical Climate Climate Managers establish an ethical climate when they… act ethically are active in company ethics programs report potential ethics violations punish those who violate the code of ethics 4.4 Web Link http://www.whistleblowers.org 29 What Is Social Responsibility? After reading these sections, you should be able to explain: to whom organizations are socially responsible for what organizations are socially responsible how organizations can choose to respond to societal demands for social responsibility whether social responsibility hurts or helps an organization’s economic performance 30 What Is Social Responsibility? Social Responsibility A business’s obligation to…  pursue policies  make decisions  take actions …that benefit society 31 To Whom Are Organizations Socially Responsible? Shareholder Shareholder Model Model Maximize Maximize Profits Profits Stakeholder Stakeholder Model Model Satisfy Satisfy Interests Interests of of Multiple Multiple Stakeholders Stakeholders 32 Shareholder Model Pros Pros Cons Cons • Firm maximizes shareholder wealth and satisfaction • Organizations cannot act effectively as moral agents for shareholders • The company stock increases in value • Time, money, and attention diverted to social causes undermine market efficiency 33 Stakeholder Model Primary Primary Stakeholders: Stakeholders: Secondary Secondary Stakeholders: Stakeholders: Shareholders Shareholders Employees Employees Customers Customers Suppliers Suppliers Governments Governments Local LocalCommunities Communities Media Media Special SpecialInterest InterestGroups Groups Trade TradeAssociations Associations 34 Organization’s Social Responsibilities Serve a social role Discretionary Abide by principles of right and wrong Ethical Obey laws and regulations Be profitable ? Legal Economic $ 35 Responses to Demands for Social Responsibility Reactive Reactive Fight all the way Withdrawal DO NOTHING Defensive Defensive Do only what is required Public Relations Approach AccommoAccommodative dative Be progressive Legal Approach Bargaining Proactive Proactive Lead the industry Problem Solving DO MUCH 36 Social Responsibility and Economic Performance Can Can cost cost aa company company Realities of Social Responsibility Sometimes Sometimes itit does does pay pay Does Does not not guarantee guarantee profitability profitability 37 ... punish unethical behavior by businesses Common Kinds of Workplace Deviance 1.1 U.S Sentencing Commission Guidelines Companies can be prosecuted and punished even if management didn’t know about... Compute aa culpability culpability score score 3 Multiply Multiply the the base base fine fine by by the the culpability culpability score score Proactive companies get smaller fines! 2.2 Compliance